Taxorly AI Tax Advisor
Answered June 3, 2026
The Qualified Business Income (QBI) deduction is a tax break for self-employed individuals and small business owners. It allows you to deduct up to 20% of your qualified business income from your taxable income. For example, if you have a net profit of $100,000 from your freelance work, you may be able to deduct $20,000 (20% of $100,000). This can save you around $4,000 to $5,000 in federal income taxes, depending on your tax bracket.
To qualify, your business must be a pass-through entity, such as a sole proprietorship, partnership, or S corporation. The QBI deduction is subject to certain limitations and phase-outs, especially for businesses with income above $170,050 for single filers or $340,100 for joint filers in 2026.
Keep accurate records of your business income and expenses to claim this deduction. Try our QBI Deduction Calculator at taxorly.com/qbi-calculator.
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